1/06/2010 @ 1:10PM

Tax Tip: Don't Call The IRS

This week, the Internal Revenue Service issued its “Top Ten Tax Time Tips” concluding with: “10. Don’t panic! If you run into a problem, remember the IRS is here to help. Try IRS.gov or call our customer service number at 800-829-1040.”

Don’t panic, but consider calling from your cell and grabbing lunch while you’re on hold. The IRS’ service “goal” this year is for just 71% of callers to get through–after an average wait of nearly 12 minutes. By contrast, it takes less than three minutes, on average, to get served at a drive-through at
Wendy’s
,
Burger King
,
McDonald’s
or
Yum! Brands’
Taco Bell, according to a survey by QSR Magazine, which tracks the fast-food industry.

In fact, the IRS’ deteriorating and “unacceptable” toll-free phone service was named the No. 1 problem facing taxpayers in National Taxpayer Advocate Nina E. Olson’s 2009 annual report, delivered to Congress Wednesday.

“Twelve minutes is outrageous,” Olson said in an interview. “In our own surveys, taxpayers say that at five minutes is when they start dropping off.”

The anticipated 12-minute hold time this filing season is triple the time taxpayers waited in 2005, 2006 and 2007, when more than 80% of callers got through. Phone service collapsed after Congress passed the first economic stimulus in February 2008 and calls to the IRS more than doubled. In 2009, callers had to wait nearly nine minutes as questions flooded in about the convoluted Recovery Rebate Credit, which was mostly paid out in 2008, but was reflected on returns due in April 2009. National disasters, including hurricanes Katrina and Rita have exacerbated the problem, since some IRS operators are diverted to answer relief hotlines.

It’s not just IRS phone service that has suffered, Olson noted; the same IRS workers who answer phones also handle IRS correspondence, leading to more backlogs there too.

Olson urged the IRS to face up to the fact that last-minute tax changes and natural disasters have become the norm and request funding from Congress to staff a special phone unit to handle the contingencies. If taxpayers can’t get answers, she argued, they’re more likely to make mistakes, which means the IRS then has to follow up with more notices and staff work. Moreover, she pointed out, taxpayer frustration with low levels of customer service contributed to the Congressional overhaul of the IRS in 1998. That overhaul hobbled the IRS for years, leading to declining enforcement and declining compliance, too.

The IRS responded that it is “dedicated to providing the best possible service to customers” through a variety of options, including the Internet, and that having a special phone unit would be inefficient. It noted that it now gives most callers an estimated wait time, so they can decide whether they want to hang up and that its own surveys show 93% “customer satisfaction” with its phone service. Olson dismissed the 93% number. “They only interview the people that stay on the line. They don’t interview the third of the people that hang up. Their customer satisfaction numbers are ridiculous,” she said.

Olson praised the IRS for finally taking on the issue, but said its proposal leaves a “gaping hole”–only paid preparers who sign returns would have to register. In many tax prep offices, she observed, only a few preparers sign all the 1040s while many more interview taxpayers and prepare the returns. Unless the IRS requires all those working on returns to register and pass the tests, the non-signers loophole will be “widely and increasingly exploited,” undercutting the regulation, she said.